Hi, 1st post here. I would l.ike to comment on some issues raised in this thread. I am old enough to have lived and worked through a number of recessions so I hope that qualifies me to comment. First off this is not a recession despite the sensationalism of the media,  5 percent unemployment and 8 percent interest rates do not make a recession. The OECD has forecast that unemployment rates in Australia may reach 6 or 7 percent and growth will slow to between 1 and 2 percent, this is still nowhere near a recession. Lets put this in perspective, during the recession of the late 80's interest rates were 17 percent and unemployment was 12 percent. Despite this the drop in housing values in my opinion during that period was not extremely significant,  big drops in housing values require a large degree of forced selling which did not occur and has little chance of ocurring in the near future. Median values need to be taken with a large grain of salt, what generally happens when the market slows is that previously overvalued areas experience large drops while the more desirable and stable areas will remain relatively flat.  I know a few people who experienced substantial capital gain during the 80s recession while I also know others who lost.  Also comparing our housing market to the US is completely invalid for a number of reasons, the difference in construction methods for one. Homes in the US are generally built much more cheaply than in Australia and to a lower standard , they require a much higher degree of maintenance.  Demographics are also completely different to Australia, the US has a large number of extremely low income areas commonly known as slums which we dont have would be one point I would make.
I wouldnt presume to tell anyone where to invest but I would suggest first to regard a number of factors.
 1. Interest rates are trending down, to some degree we have a crystal ball to look 12 months down the track. we know interest rates will be lower in 12 months than they are now, whether they will be lower in 2 years is a different story.
2. Unemployment will remain relatively low in the near future (sorry folks 7 or 8 percent unemployment is not a recession)
3. Rentals are trending up.
4. wages will remain high.
5. Australias population is becoming increasingly urbanised.

Im open to debate and criticism of my comments.
-ian